Odometer Fraud is Pervasive, Costly to American Consumers, NHTSA Research Study Concludes

U.S. Department of Transportation Office of Public Affairs Washington, D.C. http://www.nhtsa.dot.gov/

News

NHTSA 51-02 Thursday, July 11, 2002

Contact: Elly Martin Tel. No. (202) 366-9550

Odometer Fraud is Pervasive, Costly to American Consumers, NHTSA Research Study Concludes

There are more than 450,000 cases of odometer fraud per year in the United States, according to a major new research report on the topic released today by the U.S. Department of Transportation's National Highway Traffic Safety Administration (NHTSA).

"Odometer fraud puts the safety and well-being of consumers at risk because it misleads them about wear and tear on the vehicle they are buying," U.S. Transportation Secretary Norman Y. Mineta said. "This crime preys on consumers who often can afford it least, the people who buy used cars, and I commend those authorities who are helping to protect consumers by enforcing laws against tampering with odometers."

Increased costs to U.S. consumers who buy passenger vehicles with rolled back odometers amount to an estimated $2,336 per vehicle purchased, or more than $1 billion per year, the NHTSA study concludes. These statistics do not include related costs such as inflated financing, insurance, taxes and vehicle repairs that consumers pay due to odometer fraud.

Odometer fraud is the illegal practice of rolling back odometers to make it appear that vehicles have lower mileage than they actually do. When sold on the used car market, vehicles whose odometers have been rolled back, or "spun," can obtain artificially high prices. This is because a vehicle's odometer reading is considered a key indicator of the condition, and hence the value, of the vehicle. Unwary consumers typically pay more for cars that they believe have low mileage, assuming they will provide several years of trouble-free service.

All U.S. states now meet the minimum federal regulatory requirements developed through the Truth in Mileage Act (TIMA) of 1986, the latest of several measures passed by Congress to prohibit odometer tampering and protect consumers. Still, the NHTSA study found that very few states have a comprehensive detection program to identify cases of suspected odometer fraud.

The study estimates the probability of an odometer rollback to the extent that it can be detected in title transfer and other odometer reading data. The analysis used a nationally representative sample of 10,000 passenger cars, pickup trucks, vans and sport utility vehicles, as well as a national vehicle history database to identify vehicles with odometer discrepancies that suggest rollback.

The study estimated a 3.47 percent chance that a vehicle would have its odometer rolled back at any point during the first 11 years after it was produced (the scope of the research). Without a follow-up investigation, these data alone would be insufficient to prove or disprove fraud in individual cases. When an odometer has actually been rolled back and misrepresents the mileage of a car for sale, fraud has occurred and can be prosecuted.

The newly released NHTSA study is available on the Internet at: http://www.nhtsa.dot.gov/cars/rules/regrev/evaluate/pdf/809441.pdf.